City Office Guides

Tips for dealing with the commercial real estate boom in Dallas-Fort Worth

Why 2019 is DFW’s biggest development year ever

Dallas, Texas is among the fastest growing commercial real estate markets in the US, featuring 921 million square feet of space in the combined Dallas-Fort Worth metroplex. With a thriving job market and a low unemployment rate of 3%, business is booming.  

In their Q1 2019 market report, commercial real estate firm Lee & Associates predicts the region’s “largest development year ever, possibly topping 35 million SF constructed.” With net absorption expected to triple by Q4 2019, commercial rents continue to rise as landlords target 4% annual rent growth or more. 

What’s the story behind DFW’s growth?

Dallas-Fort Worth is home to a diverse range of businesses, from local incubators creating start-ups in tech and biotech, to established entities like Southwest Airlines, founded in 1967. Recent additions to the scene include healthcare giant McKesson Corporation, ranked 6th on the Fortune 500 list, who announced a headquarters move to Dallas in November 2018.

Building Blocks of Dallas/Fort Worth Commercial Real Estate

Why WeWork works for Dallas

In a market as competitive as DFW, the flexible office space model has quickly gained ground, particularly with midsize and large companies looking to set up shop or expand into new space under more flexible terms. WeWork works well for commercial real estate clients in Dallas who need a turnkey solution to their real estate needs.  Short-term lease options, zero upfront capital investment, and no construction or real estate risks are just some of the financial benefits of flexible office space. Clients also appreciate the peace of mind that comes with securing a move-in ready space, that is private to them with amazing amenities and an on-brand look and feel.

What’s the plus side for commercial real estate brokers?

Finding the right space that works for a client can be challenging in a tight commercial real estate market like DFW. Beyond space constraints, the lead times for deal closings in traditional transactions push move-in dates even further. Because of how the transactions are structured with WeWork, flex office space deals tend to go much faster and commissions are paid in a more timely manner. 

Broker commissions in these transactions are also very competitive. For example, WeWork pays commercial brokers commissions of either 10% of year 1 fees or 5% of total contract value (the greater of the two numbers) for the initial client contract. For renewals and expansions, WeWork pays 3% commission on subsequent client contracts.* The ease of structuring the deal plus access to offices that have all the perks, make selling flexible office space a very attractive option for busy brokers.

*Up to any opt-out clause, exclusive of incremental configuration costs, net of any unpaid TCV from previous contract.

Whether it’s midtown Dallas, Las Colinas or Southlake, companies are flocking to the DFW area to take advantage of tax incentives, comparatively low cost of doing business, a talented workforce and a thriving economy.  For brokers, it’s all about finding the right space in the right time frame for clients that are scrambling to gain traction in the market. 

Check out the two new WeWork locations filling up quickly in trendy North Dallas’ Preston Center and Las Colinas’ Williams Square or connect with us for other locations nearby.